Setting Up for a Sweeter ’27, Though Cocoa Risk Rising

Research evidence excerpt

Setting Up for a Sweeter ’27, Though Cocoa Risk Rising

tays largely The cocoa futures curve is now 101% higher

insulated, as 2027 was partly hedged before cocoa prices materially ticked back up. That said, and 92% higher in '26 and '27, respectively,

compared to Feb levels

the recent move higher complicates the LT picture, as cocoa spot is now tracking ~$6,000 (+60% Cocoa Futures Price Curve

vs. last month), so should prices stay elevated the pressure would shift to 2028 as lower-priced $8,000

'27 hedges roll off. The move reflects heavy West African rains and a newly official El Niño, with $7,000$6,000

early surveys pointing to 2026/27 Ivory Coast output down DD% y/y. Structural pressures are $5,000

also building, from farmgate-price alignment to sticky reformulation and cocoa-free alternatives, $4,000$3,000

suggesting lost demand in West Africa may not fully return. Encouragingly, other origins are $2,000

ramping up, led by Ecuador, and a March fireside chat we hosted with a cocoa expert argued

that then-depressed prices were unsustainable and needed to rise to fix the underinvestment 6/30/2025 1/31/2026 2/28/2026 6/30/2026 7/9/2026

constraining farms. .Source: Jefferies Research, FactSet

Reinvestment, execution, and hedge timing underpin an H2'26 profit uplift. MDLZ continues to

reinvest in brand equity, capacity, and channel investments. Supporting that effort, sharper PPA

and innovation / marketing behind Ritz and other brands are driving constructive share gains, while

modernizing parts of the supply chain adds flexibility and cost benefits. The recovery remains H2

weighted, with European retailer negotiations finalized, NA PPA shifts expected to deliver more

pronounced benefits later in the year, and cocoa hedge timing supporting material Q4 EPS growth.